Northwest Natural Gas (NYSE:NWN) & Suburban Propane Partners (NYSE:SPH) Critical Analysis

Suburban Propane Partners (NYSE:SPH) and Northwest Natural Gas (NYSE:NWN) are both utilities companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Risk and Volatility

Suburban Propane Partners has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Dividends

Suburban Propane Partners pays an annual dividend of $1.30 per share and has a dividend yield of 7.4%. Northwest Natural Gas pays an annual dividend of $1.97 per share and has a dividend yield of 4.0%. Suburban Propane Partners pays out 66.3% of its earnings in the form of a dividend. Northwest Natural Gas pays out 65.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Northwest Natural Gas has increased its dividend for 70 consecutive years.

Profitability

This table compares Suburban Propane Partners and Northwest Natural Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Suburban Propane Partners	9.37%	18.57%	5.25%
Northwest Natural Gas	9.75%	8.33%	2.03%

Earnings and Valuation

This table compares Suburban Propane Partners and Northwest Natural Gas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Suburban Propane Partners	$1.43 billion	0.82	$106.57 million	$1.96	9.00
Northwest Natural Gas	$1.29 billion	1.61	$113.32 million	$3.00	16.47

Northwest Natural Gas has lower revenue, but higher earnings than Suburban Propane Partners. Suburban Propane Partners is trading at a lower price-to-earnings ratio than Northwest Natural Gas, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

30.9% of Suburban Propane Partners shares are held by institutional investors. Comparatively, 75.1% of Northwest Natural Gas shares are held by institutional investors. 1.3% of Suburban Propane Partners shares are held by insiders. Comparatively, 0.6% of Northwest Natural Gas shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Suburban Propane Partners and Northwest Natural Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Suburban Propane Partners	0	1	0	2	3.33
Northwest Natural Gas	0	2	3	1	2.83

Northwest Natural Gas has a consensus target price of $55.25, suggesting a potential upside of 11.82%. Given Northwest Natural Gas’ higher possible upside, analysts plainly believe Northwest Natural Gas is more favorable than Suburban Propane Partners.

Summary

Northwest Natural Gas beats Suburban Propane Partners on 11 of the 18 factors compared between the two stocks.

About Suburban Propane Partners

Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, renewable propane, fuel oil, and refined fuels in the United States. The company operates through four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. The Propane segment is involved in the retail distribution of propane for space heating, water heating, cooking, and clothes drying for use as a motor fuel in internal combustion engines to power over-the-road vehicles, forklifts, and stationary engines, as well as to fire furnaces as a cutting gas to the industrial customers; and for tobacco curing, crop drying, poultry brooding, and weed control in the agricultural markets. It also engages in the wholesale distribution of propane to industrial end users. Its Fuel Oil and Refined Fuels segment engages in the retail distribution of fuel oil, diesel, kerosene, and gasoline to residential and commercial customers for use in primarily as a source of heat in homes and buildings. The Natural Gas and Electricity segment markets natural gas and electricity to residential and commercial customers in the deregulated energy markets in New York and Pennsylvania. The All Other segment sells, installs, and services a range of home comfort equipment, including whole-house heating products, air cleaners, humidifiers, and space heaters. The company serves residential, commercial, industrial, and agricultural customers primarily in the east and west coast regions of the United States, as well as portions of the Midwest region of the United States and Alaska. Suburban Propane Partners, L.P. was founded in 1945 and is based in Whippany, New Jersey.

About Northwest Natural Gas

Northwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, and industrial customers in the United States. The company operates a mist gas storage facility contracted to other utilities, third-party marketers, and electric generators; offers natural gas asset management services; and operates an appliance retail center. It also engages in gas storage, water and wastewater, non-regulated renewable natural gas, and other investment businesses. In addition, the company provides natural gas service in Oregon and southwest Washington; and water and wastewater connections. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.